Plug Power (PLUG, Financials) shares fell 7%, closing at $1.94 on Monday at 3:27 pm GMT-5, following a downgrade from Seaport Global, which reduced the rating from neutral to sell with a $1 price target.

The downgrading emphasizes growing difficulties in the hydrogen energy industry, which affects the profit margins and income of the firm.

Seaport Global listed as main influences on the choice increasing headwinds including uncertainty in hydrogen legislation and restricted capacity expansion. The company voiced worries about the viability of income sources and the capacity to maintain profit margins in face of these challenges.

Future direction of hydrogen projects in the United States is yet unknown. Initiated by President Trump's executive order "Unleashing American Energy," the Department of Energy's H2Hubs initiative is under 90-day evaluation. This study compromises the distribution of around $8 billion in awards, therefore exposing financing weaknesses for hydrogen initiatives.

European markets also face challenges. The European Union could fall short of its 2030 objective of 20 million tons of renewable hydrogen consumption, according warnings issued by the Agency for the Cooperation of Energy Regulators Project developments all throughout the area are hampered by high prices and erratic hydrogen demand.

Germany's repeal of the Power Plant Security Act has further muddled the terrain. Originally intended to help build 12.5 gigabytes of hydrogen-ready gas-fired facilities, Vice Chancellor Robert Habeck announced the revocation. This choice questions future improvements in hydrogen infrastructure as Germany's ruling coalition falls apart.

Add to Plug Power's problems operational limitations. Up until a new plant in Texas opens in the second half of 2026, the company's North American hydrogen generating capability is limited to 40 tons daily. Plug Power has to find extra 25 tons daily outside to satisfy fuel supply needs.

Plug Power announced a $30 million federal investment tax credit transfer despite the market drop. This step placed the business among the first transfer agreements for hydrogen storage and liquefaction assets and represents its first use of transferability regulations under the Inflation Reduction Act.